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Maryland Tax Reform Plans Collapse in Assembly

After months of discussion and debate, a series of anticipated tax reforms failed to garner sufficient support in the Maryland General Assembly, causing disappointment and frustration for backers of the changes, including Governor Larry Hogan.

Heated negotiations over the scope of income tax relief began to break down just prior to the Assembly’s adjournment deadline, bringing an end to hopes that the plan, estimated to cut taxes by almost $250 million, would ultimately achieve passage.

The Maryland tax attorneys at Rosenberg Martin Greenberg remain prepared to help individual and business taxpayers in Maryland with all planning, compliance and tax audit needs, always keeping our clients current on the latest legislative developments out of Annapolis.

Key details of debated Maryland tax proposals

Back in March, the Senate Budget and Taxation Committee lent its support to several bills aimed at reducing tax rates for higher-income individuals, broadening the Earned Income Tax Credit for lower-income individuals and raising exemption totals for middle-income wage earners. The Ways and Means Committee in the state House approved proposals designed to eradicate income taxes on earnings originating overseas which have been taxed elsewhere already.

Further, the Committee signed on to a proposal that would tax corporations at rates established by only their Maryland sales, rather than by a formula which took property, sales and payroll within the state into consideration. It was hoped that this move would prompt more firms to stay in or relocate to Maryland due to a potentially lower tax burden.

Controversy over higher-income tax cuts proved fatal to package

Though it was thought that broad-based support existed for the proposed tax reforms, certain provisions were not without their critics along the way. Numerous public employee advocacy groups had been voicing their displeasure with the concept of providing tax cuts to higher income individuals and corporations, citing the prospective loss of revenue which could be used to improve education and infrastructure. Ultimately, Democrats involved in the intense, eleventh-hour negotiations could not come to terms with the degree to which the proposed cuts would reach into higher income brackets, arguing that it would be inappropriate for such relief to be granted to those not in need of it.

Governor Hogan, a notable proponent of the tax relief plan, had hailed the progress made in discussions, but his enthusiasm turned to frustration once it appeared that the cuts were likely to be fatally stalled. Though Thomas Miller, Senate President, proposed holding a special session later on in order to get the tax relief approved, Governor Hogan expressed skepticism that the cost of holding that session would be justified, given the prior inability of legislators to come to agreement.

One bright spot for the Governor, however, was the fact that the Assembly did give its stamp of approval to a tax break for aerospace firm Northrop Grumman worth $37.5 million, a provision for which Hogan had personally advocated.

Timely, experienced assistance for Maryland taxpayers

Though this latest round of proposed changes to Maryland’s tax laws did not yield the results for which many had hoped, individual and business taxpayers alike can rely on the professionals at Rosenberg Martin Greenberg to stay abreast of critical changes as they happen. Our attorneys stand ready to offer tax planning guidance, audit assistance and compliance advice to clients across the state.

If you are interested in scheduling a confidential assessment of your tax situation, contact us at 410.727.6600.

Resources:

  1. The Baltimore Sun, Maryland General Assembly session ends with criminal justice reforms, no income tax breaks,http://www.baltimoresun.com/news/maryland/politics/bs-md-sine-die-20160412-story.html
  2. Washington Post, Tax-relief plans advance in Md. legislature,https://www.washingtonpost.com/local/md-politics/tax-relief-plans-advance-in-md-legislature/2016/03/18/72e89a44-ed19-11e5-a6f3-21ccdbc5f74e_story.html
  3. WBAL, Maryland lawmakers work on tax-relief proposals,http://www.wbaltv.com/politics/maryland-lawmakers-work-on-taxrelief-proposals/38569668

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Phone: 410-727-6600
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